Legal News

Another Loss for Uncle Sam: Judge Dismisses Broadcom Charges

By Ashby Jones

We can go to dinner now . . . Oh my god.

– Broadcom co-founder Henry Nicholas to former Broadcom CFO, William Ruehle, after federal judge Cormac Carney dismissed fraud and conspiracy charges against the pair Tuesday morning, according to the AP (link not yet available).

Funny to think that Henry Nicholas’s mind turned so quickly to food, but we suppose it’s not entirely surprising that a mostly unexpected jolt of good news would unleash a weird, unscripted response.

And for Nicholas (pictured), the news kept getting better. Judge Carney also asked government prosecutors to show cause why a separate drug indictment against Nicholas should not also be thrown out.

The move came after Carney last week vacated a guilty plea by Broadcom co-founder Henry Samueli in the same case. Carney found that prosecutors tried to prevent three key defense witnesses from testifying, improperly contacted attorneys for defense witnesses and leaked information about grand jury proceedings to the media. Click here for a LB post from last week on that ruling.

According to the AP, defense attorneys wept after the ruling as Samueli and Nicholas hugged nearby. Outside court, Samueli called the decision “the ultimate vindication” for Broadcom as well.

Ruehle told reporters he was surprised the case was over. “After all this time of being a defendant and being accused wrongly, it hasn’t sunk in yet,” he said. “Obviously it’s a wonderful feeling.”

Ruehle had pleaded not guilty to 14 counts of fraud and conspiracy in the high-profile investigation into stock option backdating at the Irvine-based chip-maker, one of the most
successful semiconductor developers in the world.

Broadcom was ultimately forced to write down $2.2 billion in profits after the backdating was uncovered. The company collected nearly $5 billion in revenues last year.

Carney last week tossed Samueli’s guilty plea and dismissed a charge that the 55-year-old billionaire owner of the NHL’s Anaheim Ducks lied to Securities and Exchange Commission investigators. The judge determined that Samueli did not commit the offense after the
co-founder testified for two days for Ruehle’s defense under a grant of immunity.

Photo: AP

Full post as published by Law Blog - WSJ.com on December 15, 2009 (boomark / email).